Missence mutations in Presenilin-1 (PS1) are the most common cause of autosomal dominant familial Alzheimer's disease (FAD). PS1 controls the gamma-secretase cleavage of many type I transmembrane proteins. EphrinB proteins are type I transmembrane proteins that function as ligands for the ephrinB receptors (EphBs). The ephrinB-EphB system transmits cellular signals from both the receptor and the ligand thus constituting a bi-directional signaling system. The ephrinB-EphB interactions regulate important cellular processes in development and adulthood including cell migration, axon guidance, dendritic spine morphogenesis, angiogenesis and synaptic plasticity as well as cognitive processes regulating two forms of long-term synaptic plasticity that are important for information storage in the brain, the long-term potentiation (LTP) and the long-term depression (LTD). We found that PS1 controls the proteolytic processing of both ephrinB and ephB proteins by a gamma-secretase-like activity, producing carboxy terminal ephrinB and ephB fragments. Our data shows that ephrinB and ephB proteins are first processed by a metalloproteinase (MMP) activity to produce a membrane-bound carboxy terminal fragments termed CTF1s. These fragments are subsequently cleaved by the PS1/gamma-secretase system to produce carboxy terminal fragments termed CTF2s. We obtained data that cytoplasmic sequence of both ephB and ephrinB translocate to the nucleus where they may act as transcription factors. Nuclear localization of these sequences is regulated by the PS1/gamma-secretase system. We also observed that the PS1/gamma-secretase system regulates the ephB-induced phosphorylation of Src kinase, a process initiated by the eprhinB-ephB interaction. Src kinase acts as a second messenger regulating various cellular functions like phosphorylation of cytoskeletal proteins, assembly of focal adhesions, memory formation and neurodegeneration, functions severely impaired in AD. Thus, PS1 may control synaptic structure and function by affecting the physiological processing of ephrinB ligands and ephB receptors and the ephrinB-ephB-mediated signaling.